PERTH (miningweekly.com) – Takeover target Mineral Deposits (MDL) on Thursday urged shareholders to reject an offer from its joint venture (JV) partner, Eramet.

The French mining and metallurgy company last month launched an offmarket takeover offer for MDL, offering shareholders A$1.46 a share in cash for their interest in MDL. The offer valued MDL at A$291-million.

MDL chairperson Nic Limb described the offer as “opportunistic” and said that it would deprive MDL shareholders of the full value of their investment in the company.

MDL and Eramet own the TiZir JV in a 50:50 partnership. The JV comprises two integrated producing assets – the Grande Cote mineral sands mine, in Senegal, and the TiZir Titanium and Iron (TTI) ilmenite upgrading facility in Norway.

Limb stated that the offer price did not reflect the full value of MDL relative to peer market valuations and premiums paid to shareholders in comparative takeover transactions. The offer also did not reflect the fact that the TiZir JV was operating its strategically integrated assets at, or near, record highs, with potential for future growth.

Limb further said that Eramet had also misrepresented MDL’s position on profitability and dividend payments.

MDL on Thursday flagged an expected increase in revenues and earnings before interest, taxes, depreciation and amortisation (Ebitda) for 2018 and 2019, compared with 2017, based on increased output from Grande Cote and TTI.

Revenue for 2018 is expected to reach $317-million, up from the $225-million generated in 2017, while 2019 revenues were expected to reach between $345-million and $456-million.

Ebitda in 2018 was expected to increase from the $62-million reported in 2017, to $116-million, and would again increase in 2019 to between $138-million and $241-million.

The Grande Cote operation is expected to increase production from 584 165 t of mineral sands in 2017, to 640 000 t in 2018, after which it would decline to 604 000 t in 2019.

The TTI is expected to produce about 280 000 t of titanium and iron products in 2018, compared with the 254 947 t produced in 2017. In 2019, production is again expected to increase to 319 000 t.

Eramet has already acquired a 13.3% interest in MDL from key institutional shareholders, including the outright acquisition of an 8% interest at the same price as the offer price, and the execution of a pre-bid acceptance agreement.

The takeover offer was subject to a number of conditions, including a minimum 50.01% acceptance condition and the approval of the Australian Foreign Investment Review Board, which has already been received.